Profiles: How Could Health Care Reform Affect You?

How might health care reform affect you? Amid the political debate over health care, the PBS NewsHour talked to six individuals — a small business owner, a young uninsured woman, and others — and discussed with health policy analysts how each person might fare under the House and Senate reform bills circulating on Capitol Hill.

After more than 15 years working in public relations for large companies, Jennifer Moire decided in 2007 to strike out on her own and open her own PR business in Arlington, Va.

From the beginning, Moire says, she knew she needed to find a good insurance plan — she’d heard too many stories of people being underinsured and not having enough coverage. At the same time, though, she was relatively young and healthy. She says she shopped carefully for her plan on the individual market.

“You have to really weigh a lot of different options,” Moire says. “Good coverage, but at a reasonable enough monthly premium so that it’s not eating into your profits.”

She eventually decided on a plan that cost her $200 per month.

Then, in October, Moire, who is 41, was diagnosed with breast cancer. She’s undergone a battery of tests and decided on a treatment plan with her doctor, but she’s still waiting to hear back from her insurance company — which has said it is conducting a review of her case — to find out what it will cover.

She’s also heard from social workers at the American Cancer Society, among others, that she can expect her monthly premiums to shoot up soon — and that she won’t be able to switch to another insurance company or plan now that she has a pre-existing condition.

“It’s scary,” Moire says. “In many ways it’s more scary than having cancer. Because there are almost more unknowns.”

How would reform affect her?

Moire is a perfect example of the kind of person who will benefit most from the new insurance industry regulations in the House and Senate reform bills, says Linda Blumberg, a health policy researcher at the Urban Institute. Those regulations would prohibit insurers from denying her coverage or charging her higher premiums based on her cancer diagnosis.

Right now, Moire’s premiums are almost certain to go up soon, says Georgetown University’s Karen Pollitz. If she has guaranteed rates for a year in her contract, they will hold steady until June 2010, which is when she must renew her current policy.

Whenever her rates do go up, she’ll likely have little choice but to pay the higher premiums. She won’t be able to switch insurers or plans at that point, because no other insurance company will be willing to take her on with her pre-existing condition.

Under the new regulations, which wouldn’t go into effect until 2013 under the House bill or 2014 under the Senate bill, insurers would have to take her, regardless of pre-existing conditions. That would give her the ability to switch plans if her premiums go up. And insurers also would not be able to charge variable rates based on anything but age.

The new regulations would also protect Moire from a practice called rescission, which is now legal but which would become illegal under both bills. Rescission is when insurance companies comb through the application forms and records of patients recently diagnosed with expensive diseases, in order to see if they can find any mistakes that would justify retroactively yanking the coverage.

As someone who is self-employed, Moire would be eligible to shop for insurance through the new health insurance exchange marketplace created in the House and Senate bills.

She wouldn’t qualify for any federal subsidies, however, as her income is above the limit of 400 percent of the federal poverty level ($43,320 for a single person). So she would have to pay the full cost of the insurance.

The Kaiser Family Foundation subsidy calculator estimates that she would pay about $3,600 in annual premiums for her coverage in medium cost areas of the country, and about $4,300 in annual premiums in a high-cost area of the country. That’s more than the $2,400 per year she’s paying now, but likely less than she will pay under current regulations once her rates go up.

“She won’t get subsidies,” Blumberg says. “But this is essentially a subsidy for sick people, because their costs are going to be shared across the whole system. Whereas now a lot of their costs are passed right back to them.”

Of course, none of the new rules would take effect until at least 2013 — rather late to help Moire. But more immediately, she might be eligible to participate in a temporary national “high-risk” insurance pool, if she finds that her current insurance plan will not cover the treatments she needs or if the premiums become too expensive for her to afford. Some states already have high-risk pools, but Virginia, where Moire lives, does not.

Both the House and Senate bills set aside $5 billion for a temporary national high-risk pool that would go into effect when the legislation passes and last until the new insurance industry regulations begin in 2013 or 2014.

The Senate version of the bill wouldn’t help Jennifer much — under that version, people must be uninsured for six months before they can join the pool, something that is not feasible for someone undergoing cancer treatments. But the House version allows people to transition directly from private insurance to the high-risk pool.

Many of the state-based insurance pools have faced financing problems, however — resulting in high premiums and waiting lists to participate — something that could plague a national program, too.

“Hopefully the influx of federal dollars would allow them to do better than they do now,” Blumberg says.

Helene Mullaney

Employed and Covered

Helene Mullaney says that she knows how lucky she is when it comes to health care. As a behavioral scientist at a large nonprofit research firm, her employer picks up most of the tab for her health insurance.

Her PPO plan costs $504 per month for her individual coverage; the company pays 90 percent of that premium, and Mullaney is responsible for the other 10 percent. Mullaney has no deductible when she sees an in-network health care provider, and a $400 deductible for out-of-network services.

“Most doctors that I have sought out, or want to see, or see, are in network,” she says.

Mullaney hasn’t always been so happy with her insurance. She’s been at her current company for ten years, but before that, at various points in her life, she was covered by a bare-bones graduate student plan, short-term catastrophic-only coverage, and an HMO plan.

She worries that the kind of excellent coverage she now enjoys isn’t sustainable in the long term, on a national scale.

“I’m very lucky to have what I have, and I don’t expect that this will continue,” she says. “I really think that […] it’s too expensive for my employer to continue to give this to us the way that they have.”

She says that she’d be willing to sacrifice some of her “cushy” care if it meant covering more people who are currently uninsured, but that she wouldn’t want to see money go to bureaucratic waste.

How would reform affect her?

Under both the House and Senate bills, nothing is likely to change for Mullaney — at least in the short term.

Both bills would require her large company, which employs about 1,500 people, to provide health insurance — something that it already does — or pay a penalty. (Smaller companies would be exempt from the requirement: those with fewer than 50 employees in the House bill and those with a payroll smaller than $500,000 in the Senate bill.)

The legislation would also require the plans her company offers to meet a minimum standard of coverage, but the comprehensive plan that Mullaney has right now would almost certainly meet those minimums.

And luckily for Mullaney, her plan — although very good — is not so expensive that it would qualify for the Senate bill’s new proposed tax on high-cost “Cadillac” health plans. That new 40 percent tax is intended to raise money for reform, but also to slow the rate of health care spending by cutting back on what some lawmakers consider overly lavish, expensive plans. It would be levied on the insurers who sell the plans, but could be passed on to consumers. The new tax would apply to individual plans that cost more than $8,500 and family plans that cost more than $23,000 in annual premiums. Mullaney’s plan costs about $6,000 in annual premiums, which is well under the limit.

So for the moment, there’s no incentive for her employer to change anything about her health insurance.

“There’s no worries for Helene,” says Linda Blumberg, a health policy researcher at the Urban Institute.

The question, though, is whether her premiums are likely to rise fast enough to hit the Cadillac tax limit any time soon, and how her employer might respond if they did.

That kind of rise is possible, says Georgetown University health policy researcher Karen Pollitz. The price at which the Cadillac plan tax kicks in is pegged to the Consumer Price Index — it will start at $8,500 and rise by the CPI plus one percent each year. However, health insurance premiums have generally been rising much faster than the consumer price index, and if that trend continues, in a few years Mullaney’s policy could hit the Cadillac limit.

Stuart Butler, of the conservative Heritage Foundation, says that premiums are likely to rise even more quickly than they would have without reform, because of new taxes on things like medical devices and pharmaceuticals that he believes will be passed on to consumers in their premiums.

The nonpartisan Congressional Budget Office, on the other hand, recently estimated that the changes in the Senate health reform bill would result in premiums in the large-group employer coverage market that would be zero to three percent lower in 2016 than they would be without reform.

Pollitz thinks that most companies won’t be willing to pay the new Cadillac tax, and will change the coverage they offer if necessary to avoid it.

“It’s hard to say [what would happen], but they may well cut back some benefits” to make the plan cheaper, she says.

Blumberg adds that the company might instead increase Mullaney’s co-payments and deductibles, which would make the plan’s premiums cheaper. “My guess is that they would start playing with cost sharing,” she says.

If Mullaney’s company chose to stop providing insurance altogether, under the Senate bill the company would pay a tax penalty of $750 per full time employee. Under the House bill, the company would pay 8 percent of its payroll into a Health Insurance Exchange trust fund.

“If they shut down the plan and sent everybody into the exchange, she’s one of the ones who wouldn’t get a subsidy,” Butler says.

But Linda Blumberg says that research she’s done suggests that large employers would be very unlikely to stop offering insurance.

“There are many reasons why employers provide health insurance today without any requirement to do so,” she says, including tax advantages for the workers, attracting and retaining workers and other reasons. “There is no reason to expect that now with a penalty for not providing insurance, significant numbers of these firms would stop doing what they are doing today.”

Samantha Long

Young and Uninsured

As a recent college graduate and aspiring actress, Samantha Long, 25, spent two and a half years working part-time jobs as a waitress and nanny in Los Angeles. She aimed to earn enough to get by while she tried to jumpstart her acting career.

But none of her jobs provided health insurance, so Long went without coverage. When she developed a bladder infection and ended up in the emergency room, she came out more than $7,000 in debt.

“That turned out to be a very, very expensive day,” she says.

Long tried to buy health insurance after that experience, but she was turned down due to her emergency room visit and told that she should try again in a year.

Recently, she moved back to her parents’ home in Colorado — in part because of the financial burden of living in Los Angeles without insurance. Long now works part-time as a legal assistant at a small law firm in Denver. Last year, she estimates, she made about $24,000 between that job and other part-time work. But she still does not qualify for the firm’s health insurance coverage, which is offered only to full-time employees, and she remains uninsured.

“It kind of changes your mind frame in terms of what you think about health care,” she says. “You just learn to live without it. And I don’t necessarily think that that’s a good idea.”

How would reform affect her?

Long is the “poster child” for reform, says Georgetown University health policy researcher Karen Pollitz.

Under health care reform, the insurers that turned Long down because of her hospital stay would have had to accept her. That’s because proposed regulations in both the House and Senate bills bar insurers from denying coverage based on pre-existing conditions.

Not only would Samantha be able to obtain insurance coverage, she would be required to. Both bills contain an individual mandate — a requirement that all individuals must obtain insurance, with very few exceptions for those who can’t afford it.

Because she doesn’t have employer-provided insurance, Long would be eligible to buy her insurance in an exchange, a new state-based health insurance marketplace. In both the House and Senate bills, the exchange would be open only to people without employer health insurance and to small businesses.

Because her income is less than 400 percent of the federal poverty level, Long would also be eligible for federal subsidies to help her pay for insurance. Those subsidies would be given on a sliding scale, and the scale is slightly different in the House and Senate bills.

At $24,000, Long’s income is about 220 percent of the poverty level for a single person. Under the House bill, according to the Kaiser Family Foundation’s health care subsidy calculator, in a medium-cost region of the country she’d likely pay an annual premium of $1,579 for a plan that cost $3,169. Government subsidies would pick up the rest of the tab. Under the Senate bill, she’d pay $1,693 for a plan that cost $2,637.

The House bill would also subsidize her cost-sharing expenses, like co-pays and deductibles, in effect giving her a better plan for her money. Under the Senate plan she wouldn’t get any cost-sharing help, because those subsidies end at 200 percent of the poverty level.

If Long chose not to buy health insurance, she’d pay a penalty. Under the Senate bill that tax penalty would rise each year — beginning at $95 in 2014 and rising to a limit of $750 by 2016. Under the Senate bill the penalty would be 2.5% of her income above the tax filing threshold ($9,350 for singles), which for Samantha would equal about $366.

Even if health care legislation passed immediately, most of the changes wouldn’t go into effect until 2013 (for the House bill) or 2014 (for the Senate bill). But one change that could affect Long would go into effect right away — she might be able to join her parents’ insurance plan.

Under the House bill, dependent children up to age 27 could be covered by their parents’ plan beginning Jan. 1, 2010. And under the Senate bill, dependent children up to age 26 could be covered by their parents’ plan beginning six months after the bill’s enactment.

Stuart Butler, of the Heritage Foundation, points out that her parents would have to consider the tax consequences of that choice — if they claimed her as a dependent they would have to pay taxes on her income, at their tax bracket rate.

Jordan Resnick

Small Business Owner

When Jordan Resnick started his real estate settlement company eight years ago in Bethesda, Md., he aimed to provide all of his employees with health insurance and pay 70 percent of their premiums.

He still manages to cover those costs for his four employees — he pays 68 percent of the premiums for their PPO coverage — but he says it gets harder to do so every year. The coverage is good, he says, and he and his wife and two children are on the same plan as his employees.

But the premiums have risen by double-digit percentages each of the past three years — in 2006 his insurance company charged $790 per month to cover a family, in 2009 the cost was $1,280.

“We don’t get anything more for that money,” Resnick says. “The cost just is so out of line with the rest of the costs of what business is today.”

Resnick says the costs — and the uncertainty of not knowing how much they will rise each year — make it hard to make hiring decisions and plan his business’ future.

How would reform affect him?

Both the House and Senate bills include a requirement that employers provide insurance for their employees — something that Resnick already does. The House bill includes an actual mandate, while the Senate bill does not include an explicit mandate but does spell out penalties for employers who do not provide insurance and whose workers qualify for federal insurance subsidies.

In fact, though, Resnick’s company is small enough that he would be exempted from the requirement in both bills. In the Senate bill companies with fewer than 50 employees would be exempt, and in the House bill companies with payrolls below $500,000 would be exempt.

With four employees and a payroll of about $200,000, Resnick is far below both of those thresholds.

Both bills also provide some tax credits to help small employers who wish to provide insurance. Unfortunately for Resnick, however, he would not qualify for those credits. In order to qualify, companies must be smaller than 25 employees (which he is) and have average annual wages of less than $40,000 per person (which he does not).

So under reform, Resnick would have a couple of new options. He could choose to enter the new health insurance exchange marketplace as a small business. In that case, he would pay a percentage of the premiums for a certain level of coverage offered on the exchange, and his employees could pick the particular plan they wanted.

Or, Resnick could choose to no longer offer health insurance at all, and let his employees (and himself) enter the exchange as individuals. In that case, he might be able to use the money he saved in insurance premiums to bump up salaries, or for any other purpose.

Beyond those facts, though, how analysts see Resnick’s case varies by ideological outlook. Linda Blumberg, a health policy researcher at the Urban Institute who generally favors many aspects of the reform legislation, says that it will provide significant advantages for small employers. Right now, even just shopping for coverage is a major burden for small business owners, she says.

“They don’t have a benefits manager, most likely,” she says. “They have to spend a lot of time, and worry, ‘Am I getting the best deal?'”

The exchange would for the first time provide a structured marketplace where employers and individuals could compare different options, she says, and evaluate plans at comparable levels of coverage.

She also says the plans offered in the exchange are likely to have significantly lower administrative overhead costs than current plans, which must spend a lot of money marketing to many small firms.

But Stuart Butler, of the conservative Heritage Foundation, says that the exchanges could have higher premiums than people are paying now, because of expanded coverage mandates. On the other hand, the nonpartisan Congressional Budget Office, in its analysis of the Senate plan, estimated that the legislation would have almost no effect, positive or negative, on the price of premiums for businesses with fewer than 50 employees.

Finally, Butler points out that although Resnick would be exempted the requirement to provide coverage for his employees for now, that might not always be the case.

“Let’s say he hires some more people; then he’s facing this potential threshold of $500,000 and the situation changes for him. It might look good in the short-term, but what happens three years down the road could look different.”

Carri Schiff

Underinsured

Carri Schiff’s job producing home decorating television shows provides health insurance for herself and her two daughters, both college students. But the 46-year-old single mom in Boca Raton, Fla., says that despite the fact that she’s covered, she still can’t keep up with her medical bills.

The medium-sized television production company where she works covers 50 percent of her premiums, but it does not kick in anything for her family coverage, so Schiff pays $600 per month in premiums. It’s a high-deductible PPO plan, so she is also responsible for a $5,000 in-network deductible and a $10,000 out-of-network deductible, as well as co-pays.

Schiff’s younger daughter, 19, has had long-term medical problems related to her immune system that have necessitated many doctor, hospital and specialist visits over the past two years, she says — and the problem is still not fully diagnosed. Meanwhile, she and her older daughter, 21, have also both needed doctor visits this year.

Her latest insurance statement said that she spent $7,000 this year in out-of-pocket expenses; Schiff believes it’s actually more than that. Either way, between the premiums and out-of-pocket expenses, she’s spent at least $14,000 this year on medical expenses — about 20 percent of her salary, which has gone down since she’s had to cut back on her hours due to her daughter’s medical problems.

“I just can’t keep up with the bills,” she says.

How will reform affect her?

Schiff’s situation “highlights some of the limits of what we’re willing to pay for,” says health policy researcher Linda Blumberg, of the Urban Institute. Given that Schiff already has employer-sponsored insurance, it’s not clear how much would change for her under reform.

“She is underinsured,” says Georgetown University researcher Karen Pollitz. “And the fix for the underinsured isn’t going to come any time soon.”

There is no standard definition for “underinsured,” although a common definition is a person or family who must spend more than 10 percent of their income on medical bills. By this definition, about 25 million Americans are underinsured, according to a 2008 Commonwealth fund study.

Under the House bill, Schiff would get some help with premiums — the House legislation would require her employer to pay 65 percent of premium cost for family coverage, which is more than her company pays now.

Analysts disagree about how much that is likely to affect her bottom line, however. Joseph Antos, of the conservative American Enterprise Institute, believes the extra help might be negated by higher premiums under reform, because insurance plans will be required to cover more services. The nonpartisan Congressional Budget Office estimated that for employer plans such as Schiff’s, premiums would stay the same under reform. But Antos points out that that is only on average, and that some plans that are particularly bare-bones right now and have to make bigger adjustments will see premiums rise more.

As for Schiff’s deductibles and co-pays, both the Senate and the House bills put limits on the out-of-pocket costs that insurance plans would be allowed to impose on people with employer coverage. However, those limits are similar to what Schiff is paying now — under the House bill, it’s a $5,000 per year limit on deductibles and co-pays for individuals, and $10,000 for families. In the Senate bill the out-of-pocket limits are pegged to the limits of current high-deductible Health Savings Account plans, which in 2009 were $5,950 for individuals and $11,900 for families.

Those out-of-pocket limits are lowered on a sliding scale for people with incomes below 400 percent of the poverty level. Schiff’s income is right on the border of that 400 percent cutoff for a family of three, so depending on slight fluctuations in her income she might or might not qualify for the reduced out-of-pocket limit.

“When people have decent coverage — which this is, it’s not great but it’s decent — we’re not making big changes to affordability, because it costs money and there’s not the political will to do it,” says Linda Blumberg.

Schiff’s case is also complicated by the fact that her daughters are already college age, and will be adults by the time reform would go into effect in 2013 (in the House bill) or 2014 (in the Senate bill). She might take some comfort in the fact that under new regulations that would go into effect immediately, both her daughters could stay on her health plan until age 27 (in the House bill) or 26 (in the Senate bill).

“As much as this is not ideal coverage — if her daughter has an immune disorder, as soon as she graduates she’ll be out of luck otherwise,” says Karen Pollitz — no other insurer would take her with a pre-existing condition.

Once the new regulations went into effect, both daughters could choose to stay on Schiff’s insurance plan, or, if they were not covered under their own employer-sponsored plans, they could enter the new health insurance exchange market as individuals. And if, like many young people, they earned relatively low salaries, then they might qualify for subsidies in the exchange.

“They may need a good accountant to figure out what’s best for them,” says the Heritage Foundation’s Stuart Butler. “That’s going to be true for a lot of people.”

Michael Lintz

Covered by Medicare

Michael Lintz, 71, is a retired addictions counselor in Washington, D.C. He’s been covered by Medicare for the past six years.

In general, he says, he’s been very happy with Medicare part A, which covers his doctor visits, and Medicare part B, which covers hospital care. He’s had cataract surgery, and this month he’s having an operation to correct drooping eyelids that interfere with his vision.

“I have no complaints [about Medicare part A and part B],” he says.

But Medicare part D, which pays for medications, has been a problem. Lintz is HIV-positive, and his antiretroviral medicine is expensive. Last year, he fell into the “donut hole,” or Medicare coverage gap. Most Medicare part D plans pay 75 percent of drug costs until a patient’s costs reach $2700. But then the patient must pay for the full cost of the drugs up to $6154, at which point Medicare kicks in again, paying 95 percent of costs.

Last year, between co-payments and the donut hole, Lintz spent $5,173 for his medications. He says that he’s lucky. The drug costs are a significant chunk of his income, but between social security, a pension and some investments, he’s able to pay for them.

“But what does someone do who doesn’t have enough money?” he asks.

How would reform affect him?

Lintz’s drug cost situation would improve somewhat under both the House and Senate bills, but more so under the House version.

The House bill would reduce the size of the donut hole by $500 in 2010, and eliminate it completely by 2019. The Senate bill would also reduce the coverage gap by $500 in 2010, but makes no promises to eliminate it. Both bills would also provide a 50 percent discount on brand-name drugs in the coverage gap.

That 50 percent discount wouldn’t help Lintz much, however, because his medicine is so expensive. It costs more than $20,000 per year, so even with a 50 percent discount, he would end up having to pay the full amount of the donut hole. Someone whose drugs cost less than that, however — who reaches the beginning of the donut hole but not the end — could benefit from the discount.

“Other than those facts, analysts’ take on how Lintz’s situation would change under reform varies significantly by whether they support the reform bills.

Both the House and Senate bills count on hundreds of billions of dollars in savings from changes to the Medicare payment system in order to help pay for the rest of reform.

Much of the savings would come from reducing reimbursement rates to health care providers such as hospitals and nursing homes, and adjusting rates for expected gains in productivity.

Another chunk would come from reductions in payments to Medicare Advantage plans — plans offered by private insurers through Medicare, which typically offer more services than other Medicare plans, but also cost the government more.

Though Michael says he’s not worried about how those cuts will affect his care, many other seniors are concerned.

Linda Blumberg, of the Urban Institute, says they needn’t be.

“The cuts they’re taking from the Medicare program are very much the savings that MedPAC has been advising for years,” she says, referring to the agency that advises Congress on Medicare.

“These were areas where there was overspending relative to the return […] From my perspective, even in the absence of reform, these are likely to be savings Congress would go after anyway.”

But Joseph Antos, of the conservative American Enterprise Institute, believes that the cuts could affect seniors’ care — because lower reimbursement rates could drive doctors to close their practices to Medicare patients, or even, for some older doctors, retire early.

“[Lintz] may have longer wait times for appointments, or even have to switch doctors,” Antos says.

But Karen Pollitz, of Georgetown University, disagrees.

“I think he’ll be fine,” she says. “Doctors complain [about Medicare reimbursement rates], but it pays, and it pays reliably. There’s no way they’ll walk away from it.”

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